Coca Cola Hellenic Bottling - WACC Analysis

Coca Cola Hellenic Bottling (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Coca Cola Hellenic Bottling's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Coca Cola Hellenic Bottling's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for Coca Cola Hellenic Bottling. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Coca Cola Hellenic Bottling before they make value investing decisions. This WACC analysis is used in Coca Cola Hellenic Bottling's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Coca Cola Hellenic Bottling's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for Coca Cola Hellenic Bottling uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Coca Cola Hellenic Bottling over the long term. If there are any short-term differences between the industry WACC and Coca Cola Hellenic Bottling's WACC (discount rate), then Coca Cola Hellenic Bottling is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Coca Cola Hellenic Bottling's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Coca Cola Hellenic Bottling uses a significant proportion of equity capital.